Problemwecheatu loans offers to loan you 6000 at 6 simple, Ask an Expert

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Problem:

WeCheatU Loans offers to loan you $6,000 at 6% simple interest for a five-year period. In order to make it easier for you to pay, they take each year's interest of $360 and add it to the $6,000 principal to get $7,800 ($6,000 + 5 x $360). Then, they spread this evenly over the sixty months to get your monthly payment of $130.00 ($7,800/60).

Task:

Question 1: What is the APR of this loan; and

Question 2: What is its EAR?

Please provide all calculations and formulas.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91146310

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